REVIEWING NEEDS AND GOALS

R E V I E W I N G N E E D S A N D GOALS Take the time to think about what you really want from your investments

A !nancial review is a great way to take a fresh look at your !nances and plan for the journey ahead. More importantly, it enables you to talk through your long-term !nancial objectives and discuss with us a way forward to deliver your plan and achieve them.

You need to consider what you really want from your investments. A review will also ensure you are on top of your overall asset allocation and individual shares and funds. We’ll make sure they are consistent with how much risk you want to – and can a#ord to – take. Knowing yourself, your needs and goals, and your appetite for risk is essential.

1. Consider your reasons for investing It’s important to know why you’re investing. $e !rst step is to consider your !nancial situation and your reasons for investing.

For example, you might be:

„ Looking for a way to get higher returns than on your cash savings „ Putting money aside to help pay for a speci!c goal such as your children’s or grandchildren’s education or their future wedding „ Planning for your retirement

Determining your reasons for investing now will help you work out your investment goals and in&uence how you manage your investments in future.

2. Decide on how long you can invest If you’re investing with a goal in mind, you’ve probably got a date in mind too. If you’ve got a few goals, some may be further away in time than others, so you’ll probably have di#erent strategies for your di#erent investments.

Investments rise and fall in value, so it’s sensible to use cash savings for your short-term goals and invest for your longer-term goals.

Short term Most investments need at least a !ve-year commitment, but there are other options if you don’t want to invest for this long, such as cash savings.

Medium term If you can commit your money for at least !ve years, a selection of investments might suit you. Your investments make up your ‘portfolio’ and could contain a mix of funds investing in shares, bonds and other assets, or a mixture of these, which are carefully selected and monitored for performance by professional fund managers.

Long term Let’s say you start investing for your retirement when you’re fairly young. You might have 20 or 30 years before you need to start drawing money from your investments. With time on your side, you might consider higher-risk fund exposure that can o#er the chance of higher returns in exchange for an increased risk of losing your money.

As you get closer to retirement, you might sell o# some of these riskier investments and move to safer options with the aim of protecting your investments and their returns.

How much time you’ve got to work with will have a big impact on the decisions you make. As a general rule, the longer you hold investments, the better the chance they’ll outperform cash – but there can never be a guarantee of this.

3. Make an investment plan Once you’re clear on your needs and goals, and you’ve assessed how much risk you can take, we’ll help you identify the types of investment options that could be suitable for you.

4. Build a diversi"ed portfolio Holding a balanced, diversi!ed portfolio with a mix of investments can help protect it from the ups and downs of the market. Di#erent types of investments perform well under di#erent economic conditions. By diversifying your portfolio, you can aim to make these di#erences in performance work for you.

You can diversify your portfolio in a few di"erent ways through funds that invest across:

„ Di#erent types of investments „ Di#erent countries and markets „ Di#erent types of industries and companies

A diversi!ed portfolio is likely to include a wide mix of investment types, markets and industries. How much you invest in each is called your ‘asset allocation’.

5. Make the most of tax allowances As well as deciding what to invest in, think about how you’ll hold your investments. Some types of tax-e%cient account mean you can normally keep more of the returns you make. It’s always worth thinking about whether you’re making the most of your tax allowances too.

You need always to bear in mind that these tax rules can change at any time, and the value of any particular tax treatment to you will depend on your individual circumstances. wide mix of investment types and markets still aligns with your goals.

#ese are some aspects of your portfolio you may want to check up on annually:

Changes to your "nancial goals Has something happened in your life that calls for a fundamental change to your !nancial plan? Maybe a change in circumstances has changed your time horizon or the amount of risk you’re willing to handle. If so, it’s important to take a hard look at your portfolio to determine whether it aligns with your revised !nancial goals.

Asset allocation An important part of investment planning is setting an asset allocation that you feel comfortable with. Although your portfolio may have been in line with your desired asset allocation at the beginning of the year, depending on the performance of your portfolio, your asset allocation may have changed over the period in question. If your actual allocations are outside of your targets, then perhaps it's time to readjust your portfolio to get it back in line with your original targets.

Diversi"cation Along with a portfolio with a proper asset class balance, you will want to ensure that you’re properly diversi!ed inside each asset class. Diversi!cation means owning a variety of assets that perform di#erently over time, but not too much of any one investment or type. $ere are four main asset classes – cash, !xedinterest securities, property and equities – and having exposure to them all will help reduce the overall level of risk of your investment portfolio. If one part of your portfolio isn’t doing well, the other investments you’ve made elsewhere should compensate for those losses.

Performance Consider if there are certain aspects of your portfolio that need rebalancing. You may also want to consider selling to help o#set capital gains you might take throughout the year. $e primary goal of a rebalancing strategy is to minimise risk relative to a target asset allocation, rather than to maximise returns. Over time, asset classes produce di#erent returns that can change the portfolio’s asset allocation. To recapture the portfolio’s original risk-and-return characteristics, the portfolio should therefore be rebalanced. „